COMPLEXITY IN DECISION MAKING BY CORPORATE LEADERS (

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COMPLEXITY IN DECISION MAKING BY CORPORATE LEADERS (SENIOR MANAGEMENT & GOVERNANCE) :

COMPLEXITY IN DECISION MAKING BY CORPORATE LEADERS (SENIOR MANAGEMENT & GOVERNANCE) Dr. H. Kwame Afaglo ©2015

Learning Outcomes:

Learning Outcomes Participants will: Deepen their understanding of the quantification of assigned roles along strategic and tactical planning line; Appreciate the importance of mission and vision statements in corporate decision making; Appreciate decision making from the participatory approach; Acknowledge the continuous pressure from competition along lines of a mixed market; Re-think the concept of customer centrism and its effect on products;

Learning Outcomes:

Learning Outcomes Participants will: Gain the theoretical framework involved in decision making strategies; Strengthen non-scientific influencers in decision making at the senior and governance level; Appreciate the new trend in Africa Transnational Corporations; Get the individual opportunity to re-think their corporate or governance strategy from this session.

Role of Senior Management & Board of Directors:

Role of Senior Management & Board of Directors Predominantly, Senior Management and Board of Directors ( BoD ) run their corporate entities or strategic business units (SBU) with a strategic focus, thus future survival and market leadership can only be achieved by decisions made today.

Role of Senior Management & Board of Directors:

Role of Senior Management & Board of Directors Quantitatively, Davids ’ research of over one hundred (100) corporate businesses in the United States of America (US) places a seventy-five per cent (75%) strategic role on Senior Management and higher percentage on BoD from the triangle of a sketch as figure 1 on the next slide.

DECISION MAKING RESPONSIBILITY TRIANGLE:

DECISION MAKING RESPONSIBILITY TRIANGLE DECISION MAKING RESPONSIBILITY TRIANGLE   Fig. 1.

Decision Making – Mission & Vision Statements:

Decision Making – Mission & Vision Statements Primarily, all decisions to be made must emanate from the organisational mission and vision statements to ensure coherence in making a choice among competing alternatives and collective work to achieve competitive edge.

Decision Making – Mission & Vision Statements:

Decision Making – Mission & Vision Statements Much as it is not emphatic that a business entity with a mission and vision statement will necessary be successful, it guides everyone from shareholders, customers and prospective consumers, BoD and workers alike.

Acknowledge Participants Decision Making Role:

Acknowledge Participants Decision Making Role Inferring from the background of the participants (entrepreneurs of large, middle and small enterprises, Directors in the Federal Ministries of Nigeria, Vice-Chancellors of private Universities in Nigeria, and few functional level Managers) this presentation assumes that decision making is not only generic but a significant activity performed by them.

Acknowledge Participants Decision Making & Competition:

Acknowledge Participants Decision Making & Competition However, in the face of ever growing competition between and within organisations, as well as globalisation placing a significant competitive stress on Africa business entities, leadership and governance decisions demands a relooking.

Acknowledge Participants Decision Making & Customer Centrism:

Acknowledge Participants Decision Making & Customer Centrism The demand component of the decision making, mandates African business leaders and their governance to understand customers need backed by the ability to support their need.

Acknowledge Participants Decision Making & Customer Centrism:

Acknowledge Participants Decision Making & Customer Centrism In other words, business leaders and governance in making decisions cannot refuse to perceive the effect on their customers and prospective consumers for not just survival but successfully competing in the global marketplace.

Decision Making & Democracy:

Decision Making & Democracy If it is only the current system of democracy, that is enabling private involvement in venturing in economic activities, then large and market leading organisations will have maintained their stability decision making strategy. Say, Zenith Bank and Globacom communications will only be operational in Nigeria.

Decision Making & Pressure from International Trade:

Decision Making & Pressure from International Trade But, changing population dynamics, the gradual closeness of cultures across nation-states, and World Trade Organisation (WTO) liberalisation of international trade is further heightened competition and presented variety of products on the marketplace irrespect of geo-political barriers.

Decision Making and African Transnational Corporations (AfTNC):

Decision Making and African Transnational Corporations ( AfTNC ) No wonder Nigerian financial institutions have expanded into other African countries to compete with both local and Western financial institutions. Likewise, South Africa’s MTN and Nigeria’s Globacom communications expansion on the continent of Africa and venturing into the European and American markets a significant leap into the future.

Decision Making and African Transnational Corporations (AfTNC):

Decision Making and African Transnational Corporations ( AfTNC ) A pattern is evolving for African business organisations led and run by relatively few Senior Managers and their members of BoD , which the paradigm change is expansionism for private business entities in finance, communications, retail, cement and a blink of automobile, stability for public and non-governmental organisations, and retrenchment of government owned businesses.

Decision Making and African Transnational Corporations (AfTNC):

Decision Making and African Transnational Corporations ( AfTNC ) Examples as Dangote Cement, Kantanka automobile, mobile phone tertiary education in Kenya, etc. for expansion. Retrenchment of significant government owned airlines in Africa as Ghana Airways, privatisation of hither to government owned utility companies etc. some private business also retrenched include, Procredit Ghana retrenched, and The Trust Bank.

Decision Making Strategies - Choices:

Decision Making Strategies - Choices Theoretically the evolving paradigm change in decision making and its implementation by leaders and governance of African business entities in recent times is a matrix of: * Expansion; * Stability ; * Retrenchment; * Combination ; * Integration; * Diversification.

Decision Making – Other Factors:

Decision Making – Other Factors The afore-mentioned strategies become complex in the face of long list of alternatives to choose from, and more complex for corporate leadership that their choice needs to effectively integrate with other non-scientific factors as: Political influence; External influence; Experience .

Decision Making Strategies – Knowledge Base:

Decision Making Strategies – Knowledge Base With a high level of educated personnel in the functional level of significant business entities operating in Africa, they are trained to forward the systematic strategies of the above-mentioned strategies to Senior Management and BoD for an informed decision to be made .

Decision Making – Other Factors:

Decision Making – Other Factors For the sake of simplicity, it is worth discussing the non-scientific factors that influence decision making as this falls directly in the domain of participants of this seminar before assessing the strategic matrix .

Decision Making – Political Influence:

Decision Making – Political Influence Political influence – This is both an externally and internally influencer in decision making as business leaders and their respective BoDs are responsible to their shareholders or stockholders, customers, stakeholders, central government, local government and pressure groups on the external and workers on the other hand .

Decision Making – Political Influence:

Decision Making – Political Influence It is sometimes more challenging if not most times very difficult to manager unionised workers (organisations with active Trades Union) than customers. One way of ensuring unionised workers do not serve as a resistance to the change, is to involve all workers in the planning process. Simply, the scheduling of work must be done with the involvement of the operatives and line managers.

Decision Making – Political Influence:

Decision Making – Political Influence Specifically, it is recommended line managers understand and know the use of Critical Path Analysis (CPA) and Program Evaluation and Review Technique (PERT) for effective and efficient production and cost control . Also, it is worth Senior Management ensuring the business entity operates on the successful Management By Objective (MBO) approach.

Decision Making – Political Influence:

Decision Making – Political Influence Another internal political influence is observably when some internal leaders operate within groups and so wish to have their choice among alternatives accepted by the Chief Executive Officer (CEO) and the BoD . They degree of polarity does influence decision making by leadership and governance. This bias called polarity is a strong negotiation factor in decision making, and needs to be noted.

Decision Making – External Influence:

Decision Making – External Influence Externally, the local and national government business operational policies must not only be creating an enabling environment but also a sufficient environment for businesses to thrive and achieve organisational objectives, and simultaneously growing the community in which it operates by way of employment generation, improving living conditions through Corporate Social Responsibility (CSR), reducing family poverty levels, contributing to national development through tax payments, etc.

Decision Making – External Influence:

Decision Making – External Influence Much as product development and activities of Transnational Corporations (TNC) is claimed to be positive, it has some weaknesses is the notable xenophobic tendencies in African countries during national elections. Cases in point is that of Ghana’s election 2012 and the 2010 pre-shutting down of Nigerian owned shops in Ghana ( GhanaWeb ).

Decision Making – External Influence:

Decision Making – External Influence The Chronicle published pockets of hostile activities against nomadic herdsmen in Ghana (2011) as well as the 2012 publication of the reciprocal repatriation of Ghanaians and Nigerians in the 1970s and 1980s. The recurring and unfortunate xenophobic attacks by South Africans against other Africans in South Africa (Human Rights Watch, 2008)

Decision Making – External Influence:

Decision Making – External Influence Another is the unfortunate growing religious intolerance that is sweeping through Africa from the North through the middle belt and the horn of Africa to the western part of Africa with the group names not worth mentioning in this presentation so as not to propagate their inimical role to the growth of Africa businesses on the continent and the other side (rest of the world).

Decision Making – External Influence:

Decision Making – External Influence The case of the 2013 bombing of one of the biggest retail centres in Kenya (The Guardian), intermittent kidnapping of foreign oil workers in Algeria, terrorising the people of Somalia and Kenya, inter-ethnic rivalry between the Hutus and Tutsis (United Human Rights Council, 1994 ).

Decision Making – External Influence:

Decision Making – External Influence The political instability of Liberia, Sierra Leone, Congo Democratic Republic in the later part of the 1990s to early 2000s, mass kidnapping of young girls and foreign workers on the oil fields combined with mass murder or innocent people in communities in Nigeria, have a high tendency to slow business expansion, stability and even retrenchment, as confirmed by Connors, W. (2010 ).

Decision Making – External Influence:

Decision Making – External Influence Microbial are killing Africans than perceivably carnivoures are as a result of hygiene and its perceivable attendant effect on productivity. If it is not the continuous menace of malaria, then AIDS, or EBOLA, diarrhoea, or zoonotic pandemic, which adversely combined with wars to the low supply of labour and low level of skilled labour for the job market.

Decision Making – External Influence:

Decision Making – External Influence Although there are no data to support the thought that microbial and wars in Africa has an adverse effect on productivity, it is more of common sense and speculation .

Decision Making – External Influence:

Decision Making – External Influence Multiple-taxation, high lending rates from commercial banks, unhealthy consumer price index, electricity rationing, and a low purchasing power on the continent of Africa is likely to have an effect on its businesses competitive nature and a knock-on growth that is to be propelled by significant number of African entrepreneurs, as intimated by Pitigala, N. and Hoppe, M. (2011 ).

Decision Making – Experience:

Decision Making – Experience Experience – If a strong and successful past leader has laid down a particular culture of doing business, it tends to be difficulty to change. Such circumstance requires gradual changes leading to synthesis and in the face of changing environment. It takes a lot of energy for an existing managerial team to take a decisive and completely new direction in the face of a new environment.

Decision Making – Experience:

Decision Making – Experience In such circumstances, Mintzberg , H. et al (1976) researched ten (10) corporate entities to conclude that the mavericks advocating for an innovation among the executive team will be alienated, but in the future will be vindicated when the alternative choice is upheld as the decision.

Decision Making – Experience:

Decision Making – Experience It is preferred that a new leadership or executive team is appointed by BoD to implement and evaluate an innovative choice among alternatives .

Decision Making – Experience:

Decision Making – Experience Please bear with me and this presentation will be done soon.

Decision Making – Corporate Leaders:

Decision Making – Corporate Leaders The empirical factors that serves as an input from middle to senior level management for decision making as listed earlier, though not the only input for choice among many alternatives. However it is important to understand it from business trends on the continent of Africa as well as attitudes of multinational corporations (MNC ).

Decision Making – Empire Building:

Decision Making – Empire Building From the Alexander the Great to the Ottoman and Roman empires, the Anglo-Saxon to Franco-Nordic territorial conquest were state orchestrated policies. The Japanese business global empire attitude of global expansion, likewise the recent Chinese and South Korea

Decision Making – Empire Building:

Decision Making – Empire Building following in the steps of the Japanese Nissan, Toyota, Honda by way automobiles, JVC, Sony, NEC Panasonic among others. The Japanese global business empire building is recommended for mimicking by African relatively young corporations or conglomerates as UBA, Zenith Bank, Stanbic , GT Bank and other financial institutions .

Decision Making – Empire Building AfTNC:

Decision Making – Empire Building AfTNC Retail chains as Shoprite and Maxmart , those of insurance houses as Industrial and General Insurance (IGI) Company, and International Energy Insurance (IEI) Company plc and few others have penetrated and are operational in other African countries from Nigeria .

Decision Making – Empire Building AfTNC:

Decision Making – Empire Building AfTNC The telecommunication industry is another that is shown significant penetration by MTN and Globacom of South Africa and Nigeria respectively. Available data is pointing to the two African giant economies as South Africa and Nigeria. Unlike the financial and retail sectors, the aviation sector is opened up for other African countries as Ethiopia Airlines, Kenyan Airways, Royal Air Maroc , Egypt Air, Arik Air, Air Namibia, Starbow and host of others.

Decision Making – Empire Building AfTNC:

Decision Making – Empire Building AfTNC Media is growing big in terms of using information technology to extend information to the unreachable due to poor infrastructure per the high mobile phone penetrability.

Decision Making – Empire Building AfTNC:

Decision Making – Empire Building AfTNC That of the educational sector is a grey one and with information technology revolutionising universities in the west, notably, most universities having at least a program in eLearning and the numbers growing. eLearning is the educational vessel in recent times to giving access to more and more people who need skills and cognitive training in other effectively occur the changing available job openings globally.

Decision Making – Expansionism AfTNC:

Decision Making – Expansionism AfTNC Simply put, expansion is the strategy for African business in terms of product development and the globe is to be the single marketplace, and not solely a leading market share of the Ghanaian market, or solely the Nigerian, or South African or Africa alone.

Decision Making – Product life Cycle:

Decision Making – Product life Cycle The Boston Consultants Group (BCG) matrix supports this phenomenon as : Fig. 2 Boston Consultants Matrix

Decision Making – Product life Cycle:

Decision Making – Product life Cycle With African businesses led by Nigeria and South Africa gaining experience in penetrating new market grounds across geographical borders with existing products, it is recommended they venture into other newly opened up capitalist or mixed economies as Eastern Europe, Eastern ( Austra -Asia), Southern Americas, and as expected western Europe, Nordic, and North Americas .

Decision Making – Wealth of Continent:

Decision Making – Wealth of Continent Africa is known for its rich in mineral and a biodiverse continent and a major provider of raw materials making the upstream supply more reliable. Hence a combination of expansion and backward integration strategies will serve as a catalyst for growth for the manufacturing sector.

Decision Making – Sectorial Opportunities:

Decision Making – Sectorial Opportunities The manufacturing and pharmaceutical sectors are still in its infant stages in Africa, pointing the direction for investment. That of expansion and forward integration could be another successful arrangement as Africa has a good aviation fleet sector to serve as the distribution points to end users.

Decision Making – Sectorial Opportunities:

Decision Making – Sectorial Opportunities Mergers and acquisitions are as usual significant phenomena in the business environment . UT Bank (Ghana) merge with Procredit (Asia) to ensure increase in market share in Ghana and bigger in Asian countries where pro-poor credit market is led by Procredit .

Decision Making - Choices :

Decision Making - Choices Other strategic combinations are expansion and related diversification on one hand and expansion and unrelated diversification. Like NEC Group of Companies of Japan, so is Dangote Group using expansion and unrelated diversification to increase portfolio content and capital base.

Decision Making - Choices :

Decision Making - Choices With a huge capital base from expansion and unrelated diversification, it will not be surprising that some of the African privates businesses will venture into the utility production, storage and distribution business as electricity and water. Africa has massive water bodies on the surface and underground aquifers that requires harnessing for energy, food and production purposes. Oando and Dangote Group both of Nigeria.

Decision Making - Choices:

Decision Making - Choices That of stability as a strategy is recommended for public and civil services in Africa. However it is expected of this institutions to improve in their services and ensure services are sent to the members of the public, and eschew being ‘public masters’.

Decision Making - Choices:

Decision Making - Choices Retrenchment could be implemented if the shareholders of the SBU will earn more out of retrenchment than if liquidated . Despite the earlier mentioned strategies put forth by middle to senior level management, the preferred option for African leaders and governance bodies will be the combination of expansion-integration-unrelated diversification for 2015 as discussed above.

Decision Making - Conclusion:

Decision Making - Conclusion All other decisions could be suitable for the business specific situation and the attitude of its leaders, however, it is recommended African businesses benchmark the Japanese business empire building philosophy. Generally , decision making by senior managers and BoD emanates from the mission and vision statements cum future oriented strategies and the competing environment.

References:

References Connors, W. (2010) Gunmen Kidnap Five Oil Workers in Nigeria Available from http://www.wsj.com/articles/SB10001424052748703514904575601921917568124 Accessed on [1 May 2015]   Davids , F, R. (2010) Strategic Management New Jersey, Pearson   GhanaWeb (2010) Ghanaian authorities shut Nigerian shops - Nigerian paper Available from http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=190145 Accessed on [1 May 2015]   Human Rights Watch (2008) South Africa: Punish Attackers in Xenophobic Violence Available from http://www.hrw.org/news/2008/05/22/south-africa-punish-attackers-xenophobic-violence Accessed on [1 May 2015]   Mintzberg , H. et al, (1976) The Structure of Unstructured Decision Process Administrative Science Quarterly, Vol 21(2) Available from http://www.jstor.org/discover/10.2307/2392045?uid=3738072&uid=2&uid=4&sid=21106231740161 Accessed [1 May 2015 ]

References:

References Pitigala, N. and Hoppe, M. (2011) Africa Trade Policy Notes: The Impact of Multiple-Taxation on Competitiveness in Nigeria Available from http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/EXTAFRREGTOPTRADE/0,,contentMDK:22938199~pagePK:34004173~piPK:34003707~theSitePK:502469~isCURL:Y,00.html Accessed on [1 May 2015]   The Chronicle (2011) Dealing with the Fulani Menace Available from http://thechronicle.com.gh/dealing-with-the-fulani-menace/ Accessed on [1 May 2015]   The Chronicle (2012) Nigerians in Ghana are no target Available from http://thechronicle.com.gh/nigerians-in-ghana-are-no-target/ Accessed on [1 May 1, 2015] The Guardian (2013) Terror in Westgate mall: the full story of the attacks that devastated Kenya Available from http://www.theguardian.com/world/interactive/2013/oct/04/westgate-mall-attacks-kenya-terror#undefined Accessed on [1 May 2015] United Human Rights Council (1994) Genocide in Rwanda Available from http://www.unitedhumanrights.org/genocide/genocide_in_rwanda.htm Accessed [1 May 2015]

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